San Diego office leasing fell in 2013

The 499,402-square-foot AT&T San Diego Data Center, 7337 Trade St. in the Miramar area, sold for $134.5 million, the biggest office sale in San Diego County in 2013, according to CoStar. AT&T was the seller and Carter Validus Mission Critical REIT was the buyer. — CoStar Group

San Diego County's office market saw an improvement in vacancy and rental rates in 2013, but net leased space and projects under construction did not improve, according to CoStar Group.

Mark Fitzgerald, director of research at the CBRE brokerage, said the prospects are better than they look.

"There's a huge pipeline right now," he said. "There's a lot of stuff about to come on line."

At the subregional level, he said the best office is dwindling in the healthiest markets in the University Towne Centre area and Sorrento Mesa, and tenants, who can't afford rising rates in the Class A buildings are eying Class B's.

"Everything is based off job growth," Fitzgerald said. "It looks like steady growth for the future, but not spiking up. That's a healthy thing. We don't want to spike up and spike down, especially for real estate because it has such long-term commitments."

Nationally, San Diego's office vacancy rate of 11.8 percent percent in 2013 was slightly above the national rate of 11.5 percent. Among selected cities, CoStar said Phoenix had the highest rate at 18.3 percent and New York City had the lowest at 8.3percent. The local rental rate of $26.14 was higher than the national average of $22.06 per square foot per year. San Francisco had the highest at $42.29 and Phoenix the lowest at $20.30.